Higher Interest Rates Crush The Stock Market

[CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS]( Hello investor, Higher Interest Rates Crush The Stock Market The stock market plunged further, as investors are re-adjusting their expectations for higher interest rates for longer. The dollar also gained for the fifth day in a row. What’s more, consumer confidence in the USA fell to a four-month low. This shows how consumers are frustrated with stubborn inflation – despite a strong labor market. The Federal Reserve generally ignores headline inflation and focuses on core inflation (which excludes energy and food prices), but it is becoming clear that they cannot do it anymore. The reason is simple – higher gas prices are hitting consumers hard. Costco Wholesale’s quarterly report showed comparable sales generally fell below analyst estimates, hinting that consumers are tightening up their purses. - “Consumer attitudes in recent months appear even more sensitive than normal to inflation generally and gasoline prices specifically,” Stephen Stanley, chief US economist at Santander, wrote. - “While the Fed is focused mainly on core, the average consumer is spending a substantial portion of their budget on food and energy and are unwilling to ignore those prices.” Stephen Stanley, chief US economist at Santander (Photo: CNBC) So, higher interest rates look likely and Wall Street is accepting this fact. As a result, the VIX (a fear gauge) surged to hit the highest since late May. - “The market is in the hands of the bears right now,” said Quincy Krosby, chief global strategist for LPL Financial. “It’s a wall of worry, uncertainty hovering over the market. You wouldn’t say that the selloffs have been tremendously dramatic — in fact, they’ve been kind of orderly. But there’s still that uncertainty.” Purchases of new homes also fell to a five-month low while home prices jumped to a record high over the summer. Meaning? Houses keep getting more and more expensive for Americans. Federal Reserve Bank of Minneapolis President Neel Kashkari used to be dovish where he endorsed lower interest rates. But he is changing his tone. He said he expects the Fed to raise interest rates one more time this year and keep rates elevated for longer if the economy stays strong. - “If the economy is fundamentally much stronger than we realized, on the margin that would tell me rates probably have to go a little bit higher and then be held higher for longer to cool things off,” Kashkari said. We will receive new data on durable goods today, initial jobless claims and GDP tomorrow, and consumer spending, wholesale inventories, University of Michigan consumer sentiment on Friday. Fed Chair Jerome Powell will speak at a town hall meeting – along with three other Fed officials being scheduled to speak on Thursday.  Dominant Brand In A Lucrative Industry Is Dirt-Cheap And Offers A Rare Buying Opportunity Today’s Stock Pick: Trex Company, Inc ([TREX]() Trex offers perhaps the most exciting trend in the home improvement industry. Listen, we’re trying to go green in everything. And wood decks would require a lot of trees, which bucks the trend of sustainability. What’s more, wood decks are painful to maintain. Wood will rot, warp, and splinter. And you’ll need to paint or stain wood seasonally. And eventually, it will fade due to termites and age. Anybody who owns a wood deck will remember these splinters that can pierce your fingers or feet. Trex is leading the revolution of using materials that are 95% recycled and reclaimed, like plastic bags, to create high-quality, attractive decks. In fact, they often look better than wood. And best of all, it requires virtually zero maintenance (except for regular cleaning) and lasts for 25+ years. (Source: Trex) And you can see how composite materials last longer than wood in the photo below: (Photo: timbertech.com) As a result, consumers are switching to composite decks more than ever. Composite has about 24% of the market share in decking, as of the most recent quarter. And composite continues to take about 2% share from wood every year. Trex CEO Bryan Fairbanks believes that composite would eventually hold about 45-50% of the market share: - “...we estimate composites account for approximately 25% of the total decking market but expect it will reach 45% to 50% in the future.” Each 1% market share would add ~$80 million to annual composite sales. Using the average of 2% growth, the composite market could grow by $160 million each year from taking the market share from wood alone. (Source: Trex) Cost comparison: Wood is cheaper upfront versus composite deck. The cheapest version by Trex costs about two times higher than wood. More premium versions would cost 3x or 4x more. You can see the comparison in the chart below: (Source: Trex) However, the return on investment will break even within three years and the long-term comparison is simply a no-brainer in favor of composite deck. It lasts longer and requires far less maintenance. Lifetime economics of Trex’s middle-tier version would save consumers two times more money than wood deck: (Source: Trex) Now, let’s look at how composite decks look. You’ll see how attractive they look. The grain patterns are similar to wood and composite decks can maintain their looks for decades: (Source: Trex) Trex’s composite decks sure look good, don’t you agree? Best of all, Trex thoroughly dominates this niche in composite decks. The company commands more than 60% of category web traffic through its sites – trex.com and decks.com. And it won multiple prestigious awards for top products, brand awareness, sustainability, fastest-growing business, and best mid-size companies. For example, Forbes named Trex as 12th best mid-size company in 2022: (Source: Trex) And the company is growing two times faster than the remodeling market: (Source: Trex) Sales growth: By now, you have an intuition that Trex’s sales growth is phenomenal, right? Indeed, it is. Sales grew by 14% CAGR since 2017: (Source: Trex) The stock just got cheaper: With its incredible financials, dominant market share, and surging growth, Trex’s stock is unsurprisingly popular. But thanks to the market correction, the stock price is now at the buying level. The price was at $140 in December, and it is now trading at $63 a share! There’s no doubt about it – Trex is a rare company that is in the right trend, dominates its niche, and holds pricing power. If you buy and hold for a decade, you are sure to come out ahead. Bottom line: The decking industry is going through a massive change, and Trex is at the forefront of this industry. It is known as the “Apple of the composite deck,” where its products are generally accepted as the highest-quality ones in the market. So, grab the high-quality stock for your portfolio. [CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS](       © All Rights Reserved, Trade Alliance If you no longer want to receive these messages, you may [click here]( to unsubscribe.